Summit Hotel Properties (INN) Q3 2024 earnings summary

Executive summary

• Achieved third consecutive quarter of adjusted FFO growth, driven by capital recycling and operational efficiency despite hurricane disruptions and industry headwinds.

• Year-to-date adjusted FFO per share rose nearly 8%, with a 4.5% increase in adjusted EBITDAre, even as the company was a net seller of assets.

• Portfolio repositioning through $150 million in asset sales over 18 months, including the sale of Four Points San Francisco Airport for $17.7 million, improved quality and reduced leverage.

• Urban and suburban hotels drove growth, with strong group and business transient demand offsetting leisure normalization.

• Reported a Q3 2024 net loss attributable to common stockholders of $4.3 million, compared to a $5.4 million loss in Q3 2023.

Financial highlights

• Q3 2024 pro forma RevPAR was $120.02, up 0.1% year-over-year; ADR up 1.3% to $162.95; occupancy down 1.2% to 73.7%.

• Q3 adjusted EBITDAre was $45.3 million, down 2.1% year-over-year; YTD adjusted EBITDAre up 4.5% to $150.1 million.

• Q3 adjusted FFO rose 4% to $27.6 million ($0.22/share); YTD adjusted FFO up 9.3% to $94.0 million ($0.76/share).

• Q3 pro forma hotel EBITDA was $59.7 million, down 2.9% year-over-year; YTD pro forma hotel EBITDA up 3.1% to $198.5 million.

• Q3 hotel EBITDA margin was 33.8%, down from 34.8% in Q3 2023; YTD margin expanded 32 bps to 36.1%.

Outlook and guidance

• Full-year 2024 pro forma RevPAR growth guidance updated to 1%-2% due to leisure normalization and hurricane impacts.

• Adjusted EBITDAre guidance for 2024 is $188–$194 million; adjusted FFO guidance is $113–$121 million ($0.92–$0.98/share).

• Hotel EBITDA margin expected to contract 25 bps for the year, with 200 bps contraction in Q4 due to property tax comps.

• Capital expenditures for 2024 projected at $75–$85 million.

• Expense growth for 2025 expected to remain moderate (2.5%-3%), with wage growth in the low 2% range.